IDC says global server sales continue to increase
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August 29, 2014
Market research firm IDC says that global server sales continue to increase for the current quarter,
which suggests that the long-term outlook for the market appears to be brighter than the previous three
IDC says that factory revenue in the global server market grew 2.5 percent year over year to
US $12.6 billion in the second quarter of 2014.
It's actually the midrange servers that were up 11.6 percent year over year thanks to technology
refresh cycles that kicked in.
That cycle has been accelerated by the looming demise of Windows Server 2003, users' desire to get
their hands on new Intel chip sets and, lastly, budgets finally allowing replacement of systems acquired
after the financial crisis of 2008-2009.
Volume systems (ie: low-end or so-called utility servers) saw vendors book 4.9 percent revenue
growth after demand rose for a fifth consecutive quarter.
However, enterprise servers took a 9.8 percent plunge, but IDC explains that the number is not a
cause for concern since it's a trickier segment to accurately account for.
But an interesting anomaly in the market concerns servers destined for utilization in hyperscale
data centers and those used in more conventional capacities.
But sales of the former are going well, even though the latter server varieties are falling victim
to various server consolidation projects in some companies.
There's also some good news for HP, as it emerges as the market's top server vendor. Interestingly,
IDC has also popped in a line for “ODM direct” sales, which we take it to be a way of describing sales
by the likes of Supermicro and Inspur. At $835 million for the quarter, such vendors are ahead of Cisco
and Oracle by sales value.
IDC notes that sales of 'Power' servers declined sharply year over year in advance of a significant
technology refresh,most likely caused by Microsoft's abandonment to continue to support Windows
In other IT news
It's reported that Hybrid array vendor Nimble Storage saw its revenues grow as its
rivals were unable to deliver equivalent price/performance products.
Overall, revenues were $53.8 million for its second quarter, an 89 percent increase year-on-year
and beating its own guidance of $49 million to $51 million.
There was a net loss of $26.1 million however, 149 percent worse than a year ago, meaning that losses
are increasing faster than sales revenue.
Nimble CEO Suresh Vasudevan’s statement was enthusiastic, however-- “We added a record 663 new customers
during the quarter, ending with a total of 3,756 customers, an increase of 115 percent from Q2 of 2013. During the
last four quarters, we added a total of over 2,000 new customers as we continued to increase our share
of the market. We also closed a record number of deals with a value over $100,000 each during Q2, including
the largest deal in our history.”
William Blair analyst Jason Ader said Nimble had “continued its land-and-expand success (large enterprise and
cloud service provider customer bases up 81 percent and 119 percent year-over-year, respectively).”
All in all, he sums it up like this-- “Overall, in line with commentaries from our reseller contacts,
the company appears to be firing on all cylinders as it continues to make inroads against large
storage incumbents and disrupt the market at large.“
The company is “on track to achieve the break-even point on a non-GAAP basis by the end of our next
fiscal year,” meaning by May 1st, 2016. That means a GAAP profit later in 2016.
Fibre Channel support should be added around January 2015 and this could increase its revenues in
Ader comments-- “We believe that the addition of Fibre Channel support, the newly released high-end platform,
and the general availability of its new scale-out software should expand the company's addressable
market beyond the midrange and enable it to continue taking share from vulnerable incumbents.”
Technology giants such as Dell, EMC, HP, IBM and NetApp appear unable to respond to Nimble’s success
by developing competing products.
Nimble’s international direct sales force is now in 19 countries, vs. 13 in the prior quarter, while Nimble has
international distribution arrangements in an additional 26 countries, vs. 21 in the prior quarter.”
We don’t see how competitors could lower prices to meet the price/performance levels of Nimble without
drastically affecting their profitability.
The best method would be for them to bring out hybrid array product ranges which don’t impact
their mainstream revenues but, at first glance, that would seem like an impossible marketing stunt
to pull off.
The outlook for Nimble’s third quarter is for revenues between $56 million and $58 million, the
midpoint being 71 percent higher than the year-ago period.
In other IT news
It looks like VMware is feeling the heat that OpenStack poses to its livelyhood and has decided
to do something about it by developing its own distribution of the cloud called VMware Integrated
OpenStack is often perceived as a direct threat to VMware because the two stacks have a
fair amount of overlap. Think of duplication of services in a way.
VMware's argument suggests that “Organizations, particularly enterprises, have found that deploying OpenStack
can be time and resource intensive, and that the underlying infrastructure does not always meet
their requirements for security, resilience and performance.”
The operations people who do care about those things sometimes rely on VMware to provide the
qualities listed above, so by making an OpenStack distribution that is driven by VMware developers gets
the best of both worlds.
Details about just what's in VIOS are sketchy, but the information provided to us last night before
the VMworld 2014 keynote says it will offer “full integration with VMware administration and management
tools, allowing customers to leverage existing VMware expertise to manage and troubleshoot an OpenStack
The VMworld keynote will also reveal the likes of vCentre, and VMware's other management tools,
now live under a brand called “vRealize Suite”. The suite won't just manage private clouds or hybrid
clouds running in VMware's own Air public cloud-- the company says workloads in Amazon Web Services'
cloud will also be fair game.
Also on offer will be “Infrastructure services costs, metering and analysis including public cloud
rate cards, facilitating optimal workload placement and transparent show/charge back” along with
“On-demand delivery of applications and infrastructure services via a service portal/catalog or API
and guided by policy.”
Analytics and performance optimization tools are other elements of the suite, along with “an ecosystem of
third-party management packs for Microsoft, AWS, Cisco, SAP and more.”
VMware will also reveal “vRealize Air Automation”, a subscription application and infrastructure
Another software announcement from the show is NSX 6.1, an update to VMware's network virtualization
tool with a headline feature of improved network micro-segmentation.
There's also a new version of VMware's top certification – the VCDX – focussed on network virtualization.
Material we've been provided ahead of the keynote doesn't mention a vSphere update, but does include
news of a 5.8 release for vCloud Suite complete with “policy-based provisioning capabilities that will
enable customers to add compute, network, security, storage and now disaster recovery services to their
applications and infrastructure.”
VIOS is scheduled for the first half of 2015. vRealize Suite will land later in Q3 2014. NSX 6.1 and vCloud
Suite 5.8 appear to be available now, according to what we've seen.
In other IT news
For another episode in yet such little time, China is once again taking a nationalist approach
on technology, but this time with its own PC and mobile operating systems. And it looks like the project
has been planned for a while.
The state-controlled Xinhua News Agency reported the announcement late yesterday, citing U.S.
surveillance as one of the reasons Chinese engineers are developing their own operating system
for desktop computers and mobile devices.
The new software would compete directly with Microsoft's Windows and Google's Android OSs. And it
would be available to China's consumers and government personnel alike.
The operating system is slated for release in October, Xinhua reported. The project is being
completed by an alliance of various developers operating under the guidance of Guangnan Ni,
who co-founded Chinese computer maker Lenovo in 1984.
He remains one of the top figures in the country's technology scene. Ni told Xinhua that the Chinese
government should lead the project going forward.
He noted that software developers in China have been building their operating systems on top
of Google's Android platform instead of starting from scratch, and that the government
could help move them to the new Chinese operating system.
To be sure, the Chinese government has complete and total control of the country's software market,
and this is the latest sign that authorities are seriously going domestic on technology.
When Microsoft ended support for Windows XP on April 8 of this year, it left nearly three-quarters
of Chinese computers at risk of bugs and malware. China's government was angry that Microsoft would
let them down and promised that it would look at all its options.
China then took the unusual step of blacklisting Microsoft's latest operating system, Windows 8,
banning it from all government computers.
The Chinese news agency named Microsoft's "monopoly" as one reason for bringing production domestic
rather than upgrading government computers to Windows 8.
But it also cited U.S. spying as a reason for backing its own operating system, suggesting that
the Chinese government is worried the U.S. National Security Agency might be inserting backdoors into
U.S.-made software like Windows and Android, something that the U.S. has been worried sick about
from Chinese networking firm Huawei.
Source: IDC Market Research.
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